Example Public Company Limited
Example Public Company Limited
Guide to annual reportsillustrative disclosures 2018-2019
October 2018 .au
INTRODUCTION
Australian content
b | Example Public Company Limited
From implementation to disclosure
It's been thirteen years since the adoption of IFRS in Australia and now we begin to apply a new wave of financial reporting standards with AASB 15 Revenue from Contracts with Customers and AASB 9 Financial Instruments effective 1 January 2018, and AASB 16 Leases, effective from 1 January 2019. Our financial statements will look different in many areas to what we have seen in the past. Given the wide ranging impacts of these new standards we expect considerable focus from users of financial statements and ASIC in understanding these accounting changes and also assessing whether entities have included all the required disclosures.
Now that the revenue and financial instruments transition date has come and gone, it's time for companies to explain these accounting changes to users. In addition to transition disclosures (see Note 5) the new standards have significantly enhanced ongoing disclosures. In particular these include disclosures for the disaggregation of revenue, information about nature and timing of the satisfaction of performance obligations under AASB 15 (see Note 8) as well as enhanced disclosures for impairment and hedge accounting under AASB 9 (see Note 32).
Many companies are now working through their analysis of the possible impacts that the adoption of AASB 16 will have on the financial statements as well as broader issues such as the impact on covenant compliance, impairment testing and key ratios. Accordingly, we have updated Note 46, with illustrative disclosures to highlight a more detailed assessment of the possible impacts in the period of initial application. Similar to the run up to the adoption of AASB 15 and AASB 9 we consider that regulators will expect transition plans to be highly progressed by the date of transition with disclosures made by companies to demonstrate this. A summary of other newly effective accounting and regulatory requirements for this period, including those mentioned above, are set out on our "What's new?" page.
Once again, due to Australia's close alignment to IFRS, we have made minimal changes to the source document prepared by our international colleagues and have built the Australian-specific disclosures around that International guide. The navigation bookmarks and links will assist you to identify the changes and disclosures you need.
We trust you will find Example Public Company Limited Guide to annual reports ? illustrative disclosures a useful reference in your annual report preparation. For further information on the contents of this publication or for assistance in the application of the new accounting standards, please contact your KPMG professional.
Andrew Yates National Managing Partner ? Audit, Assurance and Risk Consulting
Primary statements
Notes
Appendices
? 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo and are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
INTRODUCTION
Australian content
Primary statements
| c
How to use this guide
The purpose of this publication is to help you in preparing annual financial reports in accordance with Australian Accounting Standards (AASBs), which are International Financial Reporting Standards (IFRS) developed by the International Accounting Standards Board (IASB) as adopted by the AASB for for-profit entities.
It illustrates one possible format for financial statements for a fictitious multinational corporation involved in general business (Example Public Company Limited).
This publication relates to both annual financial years ending 31 December 2018 and 30 June 2019 and reflects standards and interpretations that have been issued by the AASB as at 15 August 2018 and that are required to be applied by an entity with an annual period beginning on 1 January 2018 and 1 July 2018 (`currently effective requirements'). The early adoption of standards or amendments to standards that are effective for annual periods beginning after 1 January 2018 (`forthcoming requirements') is not illustrated.
Although it is not exhaustive, this guide illustrates the disclosures required by IFRS for one hypothetical corporation, merely for illustrative purposes and, as such, largely without regard to materiality.
This guide should not be used as a boilerplate template. The preparation and presentation of financial statements require the preparer to exercise judgement, in terms of the choice of accounting policies, the ordering of notes to the financial statements, how the disclosures should be tailored to reflect the entity's specific circumstances, and the relevance of disclosures considering the needs of the users.
Navigating this guide
If you are using this guide for the first time: Given Australia's close alignment to International Financial Reporting Standards (IFRS), a substantial portion of Example Public Company Limited has been based on the illustrative disclosures publication prepared by our international colleagues based on `pure' IFRS.
However to illustrate additional Australian specific disclosure and alternative presentation methods that are commonly used in Australia, a separate section, has been included, just before the main financial statements. A clear cross-reference to the Australian section is included on affected international pages.
Australian specific disclosure is shown in section one Australian content
Illustrative disclosure based on IFRS is shown in section two Guide to annual financial statements.
This hypothetical corporation (the `Group') used in this publication has been applying IFRS for some time ? i.e. it is not a first-time adopter of IFRS. If you are preparing your first set of annual financial statements, that include an explicit and unreserved statement of compliance with IFRS, you are considered a first time adopter of IFRS. For more information on adopting IFRS for the first time, see Chapter 6.1 in the 15th edition 2018/19 of our publication Insights into IFRS.
If you are recurring user of this guide: We direct you to our What's new page, which contains a summary of all new or revised accounting standards and regulatory changes that have been reflected in Example Public Company Limited since the previous edition of this guide and references to other resources in the guide that you might find useful to your financials statement preparation for the current period.
Materiality considerations
Preparers need to take care not to reduce the understandability of an entity's financial statements by obscuring material information with immaterial information or by aggregating material information that is different by nature or function. Individual disclosures that are not material to the financial statements do not have to be presented ? even if they are a minimum requirement of a standard. Preparers need to consider the appropriate level of disclosure based on materiality for the reporting period
Specific guidance on materiality and its application to the financial statements is included in paragraphs 29?31 of AASB 101 Presentation of Financial Statements. In December 2017, the AASB issued Making Materiality Judgements (AASB Practice Statement 2) which provides practical guidance on how to apply the concept of materiality in the preparation of financial statements.
? 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo and are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Notes
Appendices
INTRODUCTION
Australian content
d | Example Public Company Limited
Further KPMG guidance
We also have a number of accompanying tools and publications that can be used to assist you in the preparation of your annual report and helping you to report financial information in the most meaningful way. These materials and more, can be accessed from our Financial statements preparation site, which contains a number of other valuable references and resources.
Keeping in touch
Follow `KPMG IFRS' on LinkedIn or visit ifrs for the latest on IFRS.
Whether you are new to IFRS or a current user, you can find digestible summaries of recent developments, detailed guidance on complex requirements, and practical tools such as illustrative disclosures and checklists.
KPMG Australia Financial Reporting and Accounting Standards
KPMG Global IFRS Institute
Australian Topics
Accounting & Reporting Webinars
Trust through transparency integrated reporting
Australian Reporting Updates
Better business reporting
Standards on Issue
Revenue
Financial Instruments
Leases
Primary statements
Notes
Appendices
? 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo and are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
INTRODUCTION
Australian content
Primary statements
| e
This page is intentionally blank
? 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo and are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Notes
Appendices
f | Example Public Company Limited ? illustrative disclosures
Contents
From implementation to disclosure
b
How to use this guide
c
Further KPMG Guidance
d
What's new?
2
References and abbreviations
4
Australian content
5
Corporate governance statement
7
Directors' report
10
Notes to the consolidated financial statements
40
Directors' declaration
49
ASX additional information
50
Voluntary tax disclosures ? Part A
53
Guide to annual financial statements
56
Consolidated statement of financial position
58
Consolidated statement of profit or loss, and
other comprehensive income
60
Consolidated statement of changes in equity
62
Consolidated statement of cash flows
64
Notes to the consolidated financial statements
66
Appendices
229
INew standards or amendments for 2018-19
and forthcoming requirements
229
IIPresentation of comprehensive income ?
Twostatement approach
231
IIIStatement of cash flows ? Direct method
233
IVExample disclosures for entities that early
adopt IFRS 9 Financial Instruments (2014)
233
VOther disclosures not illustrated in the
consolidated financial statements
234
IFRS Readiness for 2018
241
Acknowledgements
242
? 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo and are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Notes
Example Public Company Limited ? Illustrative disclosures | 1
Basis of preparation
66 Other information
197
1. Reporting entity
66 37. Loan covenant waiver
197
2. Basis of accounting
66 38. Operating leases
198
3. Functional and presentation currency
66 39. Commitments
199
4. Use of judgements and estimates
66 40. Contingencies
199
Performance for the year 5. Changes in significant accounting policies
68 68
41. Related parties 42. Subsequent events
200 203
6. Operating segments
82 Accounting policies
204
7. Discontinued operation
89 43. Basis of measurement
204
8. Revenue
91 44. Correction of errors
205
9. Income and expenses
98 45. Significant accounting policies
206
10. Net finance costs
99 46. Standards issued but not yet effective
227
11. Earnings per share
100 Australian content
40
Employee benefits
102 1. Reporting entity
40
12. Share-based payment arrangements
102 2. Basis of accounting
40
13. Employee benefits
105 3. Functional and presentation currency
40
Income taxes
109
26. Capital and reserves 47. Reconciliation of cash flows
41
14. Income taxes
109
from operating activities
42
15. Adjusted EBITDA ? Not used in Australian
48. Auditors' remuneration
43
context
116 49. Deed of cross guarantee
44
Assets
117 50. Parent entity disclosures
47
16. Biological assets
117
17. Inventories
121
18. Trade and other receivables
122
19. Cash and cash equivalents
123
20. Disposal group held for sale
124
21. Property, plant and equipment
126
22. Intangible assets and goodwill
129
23. Investment property
134
24. Equity-accounted investees
135
25. Other investments, including derivatives
137
Equity and liabilities
138
26. Capital and reserves
138
27. Capital management
142
28. Loans and borrowings
143
29. Trade and other payables
150
30. Deferred income/revenue
151
31. Provisions
152
Financial instruments
154
32. Financial instruments ? fair values
and risk management
154
Group composition
189
33. List of subsidiaries
189
34. Acquisition of subsidiary
190
35. Non-controlling interests
194
36. Acquisition of NCI
196
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INTRODUCTION
Australian content
2 | Example Public Company Limited
What's new?
Example Public Company Limited Guide to annual reports ? illustrative disclosures (Example Public Company Limited, or the guide) takes account of the impact of the following new or revised accounting standards and regulatory changes:
Effective for the first time for an annual reporting period ending:
31 December 2018 30 June 2019
Australian Accounting Standards
Share Based Payment Transactions (Amendments to AASB 2)
Transfers of Investment Property (Amendments to AASB 140)
Annual Improvements to AASBs 2014 -2016 Cycle
(Amendments to AASB 1 and AASB 128)
Foreign Currency Transactions and Advance Considerations (IFRIC 22)
AASB 9 Financial Instruments
AASB 15 Revenue from Contracts with Customers
Amendments and Clarifications to AASB 4 Insurance Contracts
Throughout the guide, major changes since the previous edition of this guide are highlighted as follows:
For changes effective for the first time for BOTH annual reporting periods ending 31 December 2018 and 30 June 2019, by a double black line running down the left margin of the text. The double black line in the left margin also highlights major changes in terms of what was illustrated in the 2018 edition of this guide.
Amendments to Australian Accounting Standards
Newly effective standards
AASB 9 Financial Instruments and AASB 15 Revenue from Contracts with Customers are effective for the first time for entities with an annual reporting period beginning on or after 1 January 2018. Applying the new standards is expected to significantly affect the disclosures included in the financial statements and are illustrated in Note 5, Note 8 and Note 32. The Group has no other transactions that would be affected by the newly effective standards or its accounting policies are already consistent with the new requirements.
Primary statements
Notes
Appendices
? 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo and are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
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